Why the Affordable Care Act is Not Going Away
As the November presidential election draws near, many may be considering how healthcare reform will be handled post-election. It is no secret that since the Affordable Care Act (ACA) was enacted it has been a topic of much controversy for politicians and employers. With the debate on universal healthcare continuing to rage, many Americans wonder whether the ACA will survive after the 2016 election. While a Republican-led House and a possible Republican president could mean increased scrutiny, rest assured, it is highly unlikely that the ACA will see immediate, sweeping change.
Why is the Affordable Care Act here to stay?
- Approximately 20 million Americans have health coverage for the first time ever. While this is a step in the right direction, the number of individuals covered is far less than initial estimates, which projected double that amount. Getting more Americans covered means lower costs for taxpayers overall.
- For the first time in 50 years, healthcare inflation has slowed and is at its lowest level since the government tracking began. That is due in part to the fact that Affordable Care Act reforms have reduced hospital medical errors and costly readmissions.
- Without the ACA, many hospitals and hospital staff would go uncompensated for their services. Why? Because those without insurance end up in emergency rooms, and doctors must treat emergency patients regardless of their insurance status. This drives up costs and uses staff time and treatment options that would otherwise go to those who may have more serious injuries and medical insurance.
- The lack of cohesion among Republicans as to what would constitute a viable ACA replacement is a significant hindrance to any repeal. Alternatives have been put forth, but divisions within the party result in controversy and debate. Unless the Republicans can all gather around a solid reformation plan, their divided efforts will continue to go nowhere.
- According to the Congressional Budget Office, whose woeful task is to score the cost of certain government initiatives, repealing the Affordable Care Act would cost between $137 to $353 billion depending on the methodology used. The difference between the two numbers may seem absurd, but most would agree that billions in savings rather than billions in costs would be needed to make the case to pull the plug on the ACA for good.
Why the Affordable Care Act needs to change:
- Insurance companies have put pressure on the Affordable Care Act by showing their lack of faith – earlier this year several large insurers pulled out of exchanges. This kind of occurrence causes concern for several states such as Alaska and Alabama which expect only one insurer in the online marketplace next year. This effectively creates a monopoly for services and forces individuals to choose between the one health insurance provider or risk an “uninsured” penalty.
The rationale for the insurance companies pulling out of the exchanges is financial. The insurers claim to be losing money in many of the markets because the customers purchasing through the exchanges are sicker than expected, and they have not seen the influx of younger, healthier customers that insurers hoped for. The Department of Health and Human Services responded by saying that insurers had set their premiums too low, so insurance premiums are set to rise next year. For customers whose household income is higher than the subsidy threshold, those higher premium costs will come directly out of their pockets.
- The Cadillac Tax: Regardless of who wins the White House, both presidential nominees seek to repeal the excise tax of 40% on the cost of health coverage exceeding the threshold value of $10,200 for individual coverage and $27,500 for a family, set to start in 2020. However this tax is considered a major funding avenue for the ACA. Repealing this portion means funding for the ACA has to come from elsewhere. It is predicted that penalties and fines for large-employer non-compliance will provide significant funding once they begin to be assessed.
- There are still too many uninsured Americans. The estimated numbers of Americans positively impacted by the ACA varies from 20-35 million. Yet despite the improvement in coverage, there are many still without insurance. It is estimated that even in 2025, with the ACA operating as it is today, there will still be roughly 17-27 million uninsured.
The bottom line: Repealing the Affordable Care Act would result in a net increase to the deficit and add tens of millions of uninsured Americans to the already burdened health care system. While the law may not be perfect, it is a first step toward providing health coverage to millions who have never had it. Certainly, it is safe to assume that the ACA is here to stay, but likely in an altered state.
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